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There's only one beverage stock you need to own: Pro

UBS upgrades PepsiCo

With the consumer discretionary sector under pressure, PepsiCo is the only beverage stock that's a "buy," Stephen Powers of UBS said Monday.

A strong snack-foods business and pressure from activist investor Nelson Peltz are two major factors working in its favor, he said on CNBC's "Halftime Report."

"This is a tough environment for consumer stocks, and Pepsi's doing things that create opportunity for itself on its own right, independent of the environment in which it's operating, whereas a name like Coke, I see them kind of playing the same cards as they been playing for a couple of years," he said.

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Powers holds a "buy" rating and a $100 price target on PepsiCo stock. (Disclosure: PepsiCo has been a client of UBS in the past 12 months.)

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While PepsiCo stock has lagged on a one-year basis and a five-year basis, shares are up year-to-date, Powers said, noting that the company still has several strong potential catalysts ahead.

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"The first half of this year has shown evidence that Pepsi has turned a corner, is acting with a whole lot more sense of urgency on its own right," he said. "The Frito-Lay North America business, which is its core business, has been very solid. International snacks has been good. International beverages has been actually holding its own, if not beating out Coke. And then there's a North American beverage business, which is where I see the momentum building, not on the top line but on the bottom line through productivity efforts."

Powers also said that the 0.8 percent stake Peltz's Trian Partners holds in PepsiCo makes the company's stock that much more attractive.

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"To me, if the fundamental momentum continues — and I think Peltz's presence puts a lot of pressure on Pepsi for it to continue — then it's good for shareholders," he said. "And if Pepsi falls short, then you do have a degree of insurance that protects at least against downside, if not, creates kind of a back door to upside through Trian's agitation."

By CNBC's Bruno J. Navarro